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Government agrees to 26% cap on foreign equity in insurance firms

Gurdip Singh in New Delhi

The last obstacle to opening up insurance to the private sector was removed today, with the Union Cabinet clearing a proposal to allow 26 per cent foreign equity in new Indian insurance firms.

This level of equity is to be permitted in life and general insurance joint ventures.

The amended Insurance Regulatory Authority Bill, mostly on the lines suggested by the Parliamentary Standing Committee on Finance, is likely to be moved by Finance Minister Yashwant Sinha before Parliament breaks for recess on March 19, sources said.

The Cabinet had an extensive discussion on the report and agreed to incorporate in the amended bill many of the suggestions of the committee, whose report was tabled in Parliament today.

An additional 14 per cent stake, which had been provided in the bill by the government for non-resident Indians, overseas corporate bodies, and foreign institutional investors, was rejected by the committee. The government has agreed with the suggestion.

UNI

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